Outrage over Zisco debt

Members of the public have spoken out strongly against the Zimbabwe Iron and Steel Company (Zisco)’s Debt Assumption) Bill that aims to allow government to inherit about $500 million owed by the giant steel maker to domestic and external debtors.

Ziscosteel

In a report detailing views gathered from members of the public by the David Chapfika-led Parliamentary Portfolio Committee on Finance and Economic Development presented in the National Assembly yesterday, Zimbabweans are generally against the passage of the Bill.

Some of the issues raised by the public included the need for clarity on how the debt has accumulated as well as “the need of an expeditious debt validation and reconciliation exercise due to the inconsistencies of the creditors’ list on the Bill and what the creditors are claiming”.

The parastatal owes $494 817 324 to both domestic and external creditors out of which it owes $211 912 400 in external loans, $6 095 620 to external suppliers, while $219 113 219 is owed to domestic suppliers, utilities and statutory obligations and $57 696 085 in domestic loans.

According to the report, members of the public insist that “whoever is found to have caused accumulation of the debt has to pay instead of burdening ordinary citizens”.

“Questions were raised on why Pay As You Earn, pension and funeral assurance premiums were deducted from employees’ salaries and not remitted to the respective recipients who are on the creditors list,” the reports reads.

They also argued that the proposed debt assumption may have negative socioeconomic effects on the ordinary Zimbabweans as it may put an extra financial burden on taxpayers.

“The Bill will result in an increase in government debt (currently estimated at $13,579 billion or 74,9 percent) of Gross Domestic Product (GDP) as at December 31, 2017.

“Debt assumption of $495 million will thus increase the debt to $14,074 billion which is 77,6 percent of the GDP and taking into account the projected $875,8 million, new debts in 2018, the total government debt may be estimated at $14,95 billion by year end of 2018 and this is not sustainable,” the reports further reads.

Members of the public also raised concerns that Parliament was soliciting for their views when government had already assumed the debt by paying Zisco’s outstanding salary arrears.

The accumulation of Zisco’s debt to over 77 percent, they pointed, violates provisions of the Debt Management Act, which stipulates that the government debt should not exceed 70 percent of GDP.

“The gist of the submission was that the country cannot solve one problem by creating another. Accumulation of debts inversely affects sovereign credit ratings and increase interest spending”.

Government was urged to focus on the provision of critical services such as health and education instead of assuming debts.

“The example of striking doctors was cited and with the economy in poor shape, this has a direct bearing on citizens’ rights enshrined in the Constitution.

“Prioritising Zisco debt at the expense of service delivery was argued to be unconstitutional and insensitive”.